A sidechain is a separate blockchain that is tied to its parent blockchain with the help of a two-way peg. Critical issues such as speed are resolved for a blockchain network using its sidechain. Instead of carrying out several processes on the main blockchain network, they are carried out on the sidechain. The sidechain simplifies the calculations while offering the same security as is given to the parent blockchain.

There are various ways in which a sidechain can interact but the main ability is to exchange assets between chains using the two-way peg.

There are various variations of sidechains depending on the functions they are carrying out. Different sidechains to the same parent chain have different functionalities. In the case of Bitcoin, Rootstock and Liquid are both sidechains but have very different operations. A few examples of sidechains are Polygon and Liquid Network.